Number two on the list of what insurance companies are most afraid of right now — after billions of dollars in Hurricane Irma claims — are armies of contractors and attorneys swelling those claims by billions of dollars more.

In South Florida, insurers have been raising rates for several years and blaming third-party repair contractors who persuade policyholders to sign over claims benefits and then sue if the insurer denies or underpays the contractors’ invoices — dramatically increasing claims costs.

The Consumer Protection Coalition, a public awareness effort formed by the Florida Chamber of Commerce to generate support for legislation to curb claims abuses, warned consumers this week that Irma “could create new opportunities for unscrupulous home repair vendors and trial attorneys to profit off the disaster.”

What results, the notice said, “are increased insurance costs that put the dream of home ownership out of reach for many Floridians.”

With no major hurricane striking South Florida since 2005, the higher costs have stemmed mostly from everyday claims such as damage from burst pipes or leaking water heaters.

But Hurricane Irma, insurers fear, could unleash a fresh wave of assignment-related abuses and lawsuits.

Heritage Property and Casualty Insurance Co. sent an email notice to its customers on Saturday imploring them to “call us as soon as possible after they and their family are safe.”

“Please do not contract with any vendor except a vendor approved by Heritage,” the notice said. “You can call our claims department and we will dispatch a reputable, licensed contractor to your home.”

Policyholders who sign an assignment of benefits form “no longer have the right to receive any insurance payments from Heritage, and such payments will belong to the contractor.”

Personal safety comes first, of course. But as we firm up plans to stay out of harm’s way, state insurance officials and Florida’s top insurance companies are urging...

With long to-do lists, right now most of us are working hard to get ourselves, our families and our homes prepared for Hurricane Irma.

Personal safety comes first, of course. But as we firm up plans to stay out of harm’s way, state insurance officials and Florida’s top insurance companies are urging...

(Ron Hurtibise)

The notice warns of “repairs not being made, theft of insurance payouts, unlivable conditions in your home, and it will complicate, delay, reduce and possibly result in the denial of a claim settlement.

“Policyholders should not sign any documents without obtaining permission from Heritage.”

Involvement of third-party contractors and attorneys drive up claims costs, insurers say, because contractors inflate their invoices and state law permits attorneys to collect legal fees when the insurers ultimately settle.

When policyholders sign over benefits of their claims, insurers often aren’t notified of claims and can’t inspect damages before work is under way. Most insurers recently adopted new policy language requiring policyholders to notify their insurers of damages within 72 hours.

But repair contractors and attorneys who represent them counter insurers’ arguments by saying companies routinely lowball settlement offers or deny responsibility for covered losses. Contractors say they ask policyholders to sign over the right to bill insurers for repairs because they would otherwise be forced to seek large down payments or place liens on homes to start emergency work.

Too often, they say, insurers fail to send adjusters to inspect damaged properties or pay for losses in a timely manner, leaving homeowners with little choice but to seek help from professionals adept at dealing with claims.

Irma figures to test the insurance industry’s pledges to respond quickly. In a meeting last week, officials of state-run Citizens Property Insurance Corp. said insurers in Florida were having trouble securing desired numbers of independent catastrophe adjusters to dispatch to damaged properties after the storm. The reason: many are contracted to companies working for insurers in Texas regions flooded by Hurricane Harvey.

Asked if they anticipated adjuster shortages, two of the state’s largest insurers, State Farm and Universal Property & Casualty, said they were confident they have the resources in place to respond after the storm.

Insurers are also expected to participate in mobile command centers that state insurance regulators expect to set up near severely damaged areas. Policyholders will be encouraged to visit those centers to initiate their claims and obtain emergency assistance.

Tips to help make filing post-Irma damage claims go as smoothly as possible can be found here.

To combat rising claims costs, Heritage and several other insurers have adopted a “managed repair network” business model. Customers who agree to allow insurers to oversee emergency repairs and select contractors to perform permanent fixes are rewarded with such incentives as higher coverage limits, lower deductibles and discounts on their premiums.

Other companies using the managed repair model include Florida Peninsula, based in Boca Raton, and People’s Trust, headquartered in Deerfield Beach.

People’s Trust operates the most hands-on version of the model. It formed an affiliated contracting company, Rapid Response Team, with warehouses full of building materials.

The company says it is well prepared to take action after the storm passes.

“We have thousands of dryers, humidifiers, tons of tarps and peel and stick roofing material, as well as a generator loan program,” said Amy Rosen, chief marketing officer. “We have a staff working over the weekend in our office taking calls for First Notice of Loss, and we are ready to go!”

Rosen said the company’s response plan will show “how a preferred contractor endorsement and direct-repair model can really benefit consumers.”

Citizens, the so-called insurer of last resort, kicked off its version of a managed repair network on July 1 but has so far used it to handle just a handful of claims, officials said in a meeting of the company’s board of governors on Thursday.

Citizens policyholders who agree to use the program will not be charged for emergency water removal services, nor will participating homeowner be subject to a new $10,000 cap on water damage repairs.

The program is initially intended for non-weather-related water claims. But Citizens still wants its customers, including 223,000 in the tricounty region, to “Call Citizens First” when reporting storm claims.

“Do not sign over your insurance benefits to anyone,” the company warns in a special Hurricane Irma section of its website. Signing over your benefits can cause an increase in costs for which you could be left on the hook.”